~ 我看青山多妩媚，料青山见我应如是 The mountain looks so beautiful in my eyes, that it reminds me of myself

The city’s standing has continued to climb

The city’s standing has continued to climbBy Sundeep Tucker 2009-10-21

In recent years, Hong Kong has established itself as a leading international financial centre.

Three years ago it hosted the world’s largest initial public offering, the $21.9bn listing of Industrial and Commercial Bank of China, and it remains a honeypot for listings of mainland companies.

If anything, Hong Kong’s status as a financial centre has continued to climb.

The decision by HSBC to relocate its chief executive from London to Hong Kong, effective in February, is likely to force many businesses to reassess whether they have enough senior bodies in the city.

In addition, Hong Kong closed the gap on London and New York in a ranking of competitiveness among the world’s leading financial centres, released last month.

The Global Financial Centres Index, compiled twice yearly by the Z/Yen Group think-tank and published by the City of London, combines a survey of financial professionals with factors such as office rents, airport satisfaction and tax rates.

London has topped every survey since it began three years ago, followed by New York. Both London and New York improved their overall scores since the March ranking. London added 9 points to reach 790 and New York rose by 6 points to 774 of a possible 1,000.

But their single-digit gains were dwarfed by the 45 points added by Hong Kong to reach 729.

“It is a reality that a lot of economic activity is shifting to Asia-Pacific and no one will be able to stop it. The question for those of us in London is, how do we work with it? It is not a zero-sum game,” says Sir Stephen Wright, the chief executive of International Financial Services London, which promotes City of London companies abroad.

It is a far cry from the Asian financial crisis of 1997-98, which badly hit Hong Kong, prompting a collapse in share prices and the property market – which underpin sentiment.

In the years afterwards, the intensity and importance of Hong Kong’s trade and investment links with mainland China increased.

Before the 1997 handover to China, Hong Kong was governed by Britain and many of its oldest banking names, including SG Warburg and Jardine Fleming, dominated the colony’s financial scene.

This changed in the following years, as global investment banks from the US and Europe expanded in the city, attracted by the ever-larger deals and business volumes emanating from China and India.

Goldman Sachs, Morgan Stanley, JPMorgan, Deutsche Bank and UBS were among those to take several floors each in gleaming skyscrapers, such as the International Financial Centre.

Hong Kong is Asia-Pacific headquarters for all the global investment banks, and the region typically accounts for between 20 and 30 per cent of global revenues.

Rory Tapner, who recently stepped down as chief executive of UBS’ Asia-Pacific operations, recalls that, prior to 1997, the region was not as developed and there were few large deals.

He added: “Hong Kong will remain a critical centre and a gateway to China. It can only thrive by being on the doorstep of the fastest growing large economy in the world.”

A recent development on the financial scene is the emergence of a new breed of leadership that does not herald from the US or Europe.

Mr Tapner, a Briton, handed over the reins this summer at UBS to Yoon Chi-won, a native of South Korea. Admittedly, Mr Yoon is no ordinary banker but a former engineer who designed the satellite communications network used in the US space shuttle programme.

Nonetheless, more bankers born in China, India and Korea are moving up the career ladder within their organisations in Hong Kong.

The pecking order continues to change. The crisis forced many groups to scale back their operations across the region, with inevitable redundancies in Hong Kong.

Those planning to boost their presence in Hong Kong were able to recruit to fill any coverage gaps.

Nomura, the Japanese bank, last year acquired the Asian operations of Lehman Brothers, the collapsed US bank, boosting its status in Hong Kong.

Barclays, the UK bank, has also been on an aggressive hiring spree, seeking to make inroads in regional equity, as well as debt, markets.

Australia’s Macquarie Group has also established Hong Kong as a key global centre and springboard for its ambitions in China, while even mainland brokerages such as Citic Securities have beefed up their teams in the city to work on initial public offerings.

Veteran bankers say that the key to success in Hong Kong is to take a long-term view.

“Asian culture rewards longevity and local regulators and politicians remember which banks stayed after the Asian financial crisis and which scaled back their operations,” says Mr Tapner.